Calculate the value of fridge- air preferred stock

Assignment Help Accounting Basics

Reference no: EM13817982

1. The Fridge- Air Company's preferred stock pays a dividend of $ 4.50 per share annually. If the required rate of return on compara-ble quality preferred stocks is 14 percent, calculate the value of Fridge- Air's preferred stock.

2. The Joseph Company has a stock issue that pays a fixed dividend of $ 3.00 per share annually. Investors believe the nominal risk- free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock?

3. The Lo Company earned $ 2.60 per share and paid a dividend of $ 1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock:

a. if the required rate of return is 12 percent.

b. if the required rate of return is 15 percent.

c. Given your answers to ( a) and ( b), how are stock prices affected by changes in investor's required rates of return?

Reference no: EM13817982

Questions Cloud

How cultural barriers affect the change process : Drawing from the lecture and readings, provide a specific example for either the change management concept or the contingency approach. How might cultural barriers and communication constraints affect the change process?

Analyzing ethical issues in marketing summary : Analyzing Ethical Issues in Marketing Summary- Complete (this portion is optional) the simulation, Analyzing Ethical Issues in Marketing

Federal government : federal government

Describes a successful change initiative within organization : Describes a successful change initiative within an organization. Next, locate and discuss a scholarly article that describes a failed change initiative within an organization.

Calculate the value of fridge- air preferred stock : The Fridge- Air Company's preferred stock pays a dividend of $ 4.50 per share annually. If the required rate of return on compara-ble quality preferred stocks is 14 percent, calculate the value of Fridge- Air's preferred stock.

Health care reimbursement : Health Care Reimbursement

Write a brief history of e-commerce : Write a brief history of E-commerce. Then go in to the good, the bad, and the ugly of E-commerce from a consumer or business standpoint (either or).

Concept of motivation : Synthesize the concept of motivation, and examine the substantial reasons why motivation is difficult to understand

Write a paper on security architecture and design : Write a paper on Security Architecture and Design, Operations Security, Cryptography and Business Continuity and Disaster Recovery Planning.

User Account

All Pages